TaxTech June 25, 2018

Last week, UK’s HRMC published Brief 5 “VAT liability on goods supplied on approval Policy”. It explains HMRC’s policy on when goods are supplied on approval to the intended buyer. We also saw the announcement from the European Commission on the adoption of additional customs duty regulations on certain goods from the US, effective per June 22, 2018. However, under EU Implementing Regulation 2018/724 (Article 4), goods that have already been exported from the US will not be subject to these new increased customs duties. The European Commission is requesting stakeholders consultation on the evaluation of invoicing rules. The scope of the consultation is evaluate whether the Second Invoicing Directive (Directive 2010/45/EU) met its set objectives and to which extent the invoicing rules are still aligned with stakeholders’ needs. Additional updates and changes from the finance industry from last week are:

The Netherlands: Potential VAT rate change. The Dutch government has announced plans for an increase in the current reduced VAT rate from 6% to 9%. This change will be part of the 2019 Tax Plan and will become effective on January 1, 2019. More here.

EU: New measures to tackle VAT fraud. The EU Commission has welcomed the general approach* reached by EU Member States on new tools to close loopholes in the EU’s VAT system. The loopholes consist of inconsistencies which can lead to large-scale VAT fraud causing losses of up to €50 billion for national budgets of EU Member States each year. More here.

EU: VAT minimum standard rate set permanently at 15%. The EU Council adopted a Directive making the 15% minimum standard rate a permanent feature of a new VAT system, which has been maintained as a provisional basis since 1993. The minimum standard rate prevents excessive divergence in VAT rates between the EU Member States. This measure eliminates the risk of distortions of competition through lower VAT rates that would have an impact on cross-border shopping and trade. In practice, the average standard VAT rate is currently 21.5% within the EU. Release here.

United States: Supreme Court lets States force online retailers to collect sales tax. In a 5-4 ruling, the US Supreme Court decided that States can collect sales tax from online retailers, even if those companies don’t have a physical presence in respective state. A key question will be how States will go about collecting taxes from the sellers. The Supreme Court decision on the case.

Millions in VAT potential for Dell Technologies. Dell had been missing out on millions of their VAT reclaim potential as smaller invoices were not considered for VAT recovery. Dell found out that only 38% of the total invoices were analyzed. A stunning 62% of Dell’s invoices were below €50 and therefore fell under the minimum review threshold. Read more here on what was done to improve their VAT recovery process.


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